On 1 August 2017, The Tax Information Exchange Agreement (TIEA) between Sweden and Dominica will enter into force. The agreement generally applies from 1 August 2017 for criminal tax issues and from 1 January 2018 for all other tax issues.
The Swedish Government on 20 June 2017 issued a statement proposing important changes in the area of corporate taxation. The main proposals are summarised below:
- According to the announcement the deductibility of the net interest expense would be limited to 35% of taxable EBIT, while a limitation to 25% of taxable EBITDA is presented as an alternative.
- The corporate income tax rate for legal entities would be reduced from 22% to 20%.
- New rules are proposed to prevent deductions relating to hybrid mismatches. The rules should implement parts of BEPS Action 2 and ATAD (Anti Tax Avoidance Directive). Additional proposals are to be expected later to fully implement the restrictions from Action 2 and ATAD.
- According to the announcement, each company in a group may decide to apply a safe harbour rule which allows a deduction of the net interest expense of SEK 100,000 (approximately € 10,000). The limit applies to group level so that the total amount that can be deducted within a group under the Safe Harbor rule is limited to SEK 100,000.
- The introduction of tax rules for finance leases and the new leasing obligation would be applicable to assets such as inventory, machinery and equipment, buildings, fixed installations/ground installations and land.
- Temporary limitation on the utilisation of tax losses carry forward. It is proposed that there will be a temporary restriction during two (EBIT-rule) or three years (EBITDA-rule) in respect of the utilisation of tax losses carry forward. Only 50% of the taxable profit will be possible to set off against losses. Any unused losses may be carried forward indefinitely.
- Standardised income from emergency residences for non-life insurers
It is proposed that most new provisions should enter into force on 1 July 2018.
The Swedish government has Proposes some tax changes on 30 March 2017, regarding taxation of real estate. The proposal will now be referred to stakeholders for consultation before a final version is handed to Parliament for voting. The new rules are proposed to enter into force on 1 July 2018.
The key features of the process are:
-The sale of a company whish’s assets mainly consist of real estate will, simplified, be taxed as if the real estate was sold separately. The company sold will be liable to pay the tax.
– The stamp duty should no longer be levied on intra-group property transactions and the stamp duty for companies is dropped from 4.5% to 2%.
-Intra-group real estate transactions of land and buildings that can be carried out below market value are to support continuity in terms of acquisition values, accumulated depreciation and the tax residual value.
– A tax impartial transfer of real estate below the fair market value will have no effect on the acquisition value, tax base, and tax reductions made.
On 1 March 2017, the South African Revenue (SARS) issued a private binding ruling no. BPR 267 regarding dividends tax and the ‘most favoured nation’ clause in a tax treaty concluded with Sweden. The ruling determines whether dividends tax must be withheld when a dividend is paid to the beneficial owner that is a resident of the Kingdom of Sweden. Sweden and South Africa concluded the SA/Sweden tax treaty which, when read with the Protocol, includes a ‘most favoured nation’ clause.
The ruling is mainly issued on the basis of an application from a company incorporated in and a resident of South Africa that is a wholly-owned subsidiary of a company incorporated in and a resident of Sweden. According to ruling, applicant will not be required to withhold dividends tax from the dividend payments to parent company if parent company complies with the documentary requirements in section 64G(3). The ruling describes that the MFN treatment under the treaty with Sweden was triggered by the South Africa – Kuwait Income Tax Treaty (2004).
This binding private ruling is valid for a period of three years from 7 December 2016.
The regulation on the automatic exchange of country-by-country (CbC) reporting (the Regulation) was published in the Official Gazette on 14 March 2017. The law proposal had been adopted on 1st March 2017. The Regulation, which will enter into force on 1 April 2017 and also available here.
The government announced on 24 February 2017 its decision to withdraw plans to introduce a special tax on banks and other financial institutions. The bank tax was originally intended to eliminate the tax advantage the banking sector receives due to the fact that financial services are exempt from VAT.